Monday, January 27, 2014

Apple stock plunged $46 - 8% - in after hour trading this afternoon after releasing its 1st quarter fiscal year earnings. It's irrelevant whether or not they beat estimates because the estimates are rigged by Wall Street analysts to be beaten anyway. It lowered its outlook for 2014 and that was relevant. The net-net of it is, as I've been saying ad nauseum, the consumer is dying on a vine.

There's a lot of mutual and hedge funds who are highly overweighted in AAPL stock. Unless the Fed intervenes heavily tonight and tomorrow in the futures markets, the rest of this week could get ugly for the stock market. In addion, the NYSE released monthly margin debt numbers for November and it showed a new all-time high for margin debt, by a considerable amount. Historically market peaks occur when investor margin debt goes parabolic, which it has.

I have been warning anyone willing to listen that this is the most overvalued market in the history of this country, especially if you adjust earnings by using the GAAP accounting standards that were enforced 20 years ago. My advice is to sell now and get your money out of the system as much as possible. It won't be long before there's a stampede for the exits...foretold is forewarned.

14 comments:

...unless the fed refuses to let the markets crash and stops the planned taper or even increases QE. Hell, the fed could BUY stocks itself if it fears armageddon. In fact, EM turmoil could trigger CDS and derivatives defaults/cascading bank failures circa 2008/2009. I have no doubt markets should tank, but do doubt the fed letting it happen if it means complete deflationary meltdown, even if the alternative is an imminent currency crisis. We could have our QE on steroids/crack up boom first.

"..unless the fed refuses to let the markets crash and stops the planned taper or even increases QE. Hell, the fed could BUY stocks itself if it fears armageddon. In fact, EM turmoil could trigger CDS and derivatives defaults/cascading bank failures circa 2008/2009. I have no doubt markets should tank, but do doubt the fed letting it happen if it means complete deflationary meltdown, even if the alternative is an imminent currency crisis. We could have our QE on steroids/crack up boom first."

Nothing goes up in a straight line. Even during the Weimer and Post French Revolution, you had monetary crises that led to additional money printing. Markets went up and down like a roller coaster with the final outcome of a rocket to the moon. So stocks often and will go down in prelude to a crackup boom. Once bonds, stocks, retirement accounts, housing prices, everything falls, people will beg for even more money printing. The crackup boom is never a problem of excess money. The crackup boom occurs when there is never enough money because money is debt and debt is all glitter and no gold.

"Last month, when the Reno City Council voted to sell off a piece of land at a loss to rescue one of its bonds from default, more than one council member said their motivation to back the deal was driven by the desire to keep Reno from becoming “a Detroit,” which filed for bankruptcy last year.

Reno may not be on the brink of insolvency, but it is facing some pretty significant financial challenges, not the least of which is the fact its overall debt load is nearly nine times what it was 15 years ago."

Went to bank and cleaned out remainder of cash. My "personal banker" asked why? I just said hookers, blow and Vegas. Full disclosure I'm single. The truth is if pressed as to why you want YOUR money, tell them it is none of their Fu@king business.

I'm taking a deep breath and telling you what I really think. I think the Fed and the US government are embarked on a campaign to tell the American people that the US economy is a lot better than the people think it is. This is a way of boosting Obama's legacy.

I think that the US is fighting the forces of deleveraging and deflation, and I think the Fed is losing its battle against deflation. After spending trillions via quantitative easing, the Fed has still been unable to push inflation to its desired level of 2%.

I think the Fed's QE has flowed to the rich 1%, sending tangible items at auction and collectibles through the roof. The Fed's QE has ironically shifted the items that the middle class uses progressively higher -- college tuition, food, insurance, energy, medical, etc. I think the middle class is suffering hugely and a fringe of the middle class has dropped into poverty.

I think inflation of the daily items that the middle class depends on is really running near 10%. I think the Fed's and the US government's efforts to defame gold have been a disaster. While the Fed and the US are bad-mouthing gold and driving it lower, their anti-gold campaign has been a boon for China. While the US denigrates gold, China, which understands gold, is accumulating all it can. I think that the US does not have the gold that it pretends to have.

I think China is intent on making its yuan the world's reserve currency. I think we will see a powerful gold-backed convertible yuan become the world's new reserve currency. I see China's Communist leaders literally begging its populace to accumulate gold. I see the Federal reserve intent on making its fiat currency the only accepted money, while gold, its competition, is scorned.

I see the Federal Reserve and its fiat money as the single greatest enemy of the US. Which would you rather own, a gold-backed yuan or a debt-backed Federal Reserve note? That's the question the world will be faced with.”

Regulator Keeps Details—and Much More—Secret Despite Request for Info on AIG Probe. The Securities and Exchange Commission recently released documents related to its probe into the near-collapse of American International Group Inc. with hundreds of redactions to keep information secret. SEC officials blacked out information more than 800 separate times in one transcript of a witness interview that lasted less than three hours. On one page, redactions left just four words remaining: "okay," "by," "in" and "did." On another page, "um hmm" is one of three short phrases left untouched. Among the blacked-out details: the names of witnesses, their lawyers, the SEC enforcement officials and even the proofreaders who checked the transcripts.

Among those actions is a new retirement savings plan geared toward workers whose employers don’t currently offer such plans. The program would allow first-time savers to start building up savings in Treasury bonds that eventually could be converted into a traditional IRAs, according to two people who have discussed the proposal with the administration. Those people weren’t authorized to discuss it ahead of the announcement and insisted on anonymity.

Another bad plan from “the most transparent administration in history.”

That’s the spirit! Get unsophisticated households to invest at 0% on the short-end of the yield curve … or take on more risk on the long-end of the yield curve at 3.7%.

Since the Federal Reserve is the largest holder of Treasury debt (followed by China, Japan, and off-shore banks in the Caribbean), is the administration trying to provide comfort to China that we are willing to sucker our people into low yield debt?

Or is Obama trying to sucker our own people to take heat off The Federal Reserve?

Or is Obama trying to bail out off-shore investors in Caribbean banks?

Whatever happened to freedom of choice? What happens when the government decides to seize IRAs?

4. AAPL - Image alternates between Retail buying and selling at the market.Note how retail buy market orders always execute near (but a fraction of a penny below) the top of the NBBO (top of gray shading) and retail sell market orders always execute near (but a fraction of a penny above) the bottom of the NBBO. This is where other limit orders that set the NBBO are getting front run by internalizers. For details on how this works, read sub-penny pricing which explains what "retail price improvement" is really all about.

Bernard Madoff’s former computer programmers created a web of simple equations to make thousands of fake transaction numbers, dates and time stamps appear realistic on documents used to trick auditors, a jury was told in the trial of five of the con man’s former top aides.

The men, Jerome O’Hara and George Perez, wrote dozens of “special” programs during audits by the U.S. Securities and Exchange Commission and HSBC Holdings Plc (HSBA), Richard Dietrich, a senior technician at International Business Machines Corp., testified yesterday in federal court in Manhattan. Prosecutors have said the programming wouldn’t have been necessary if real trading had taken place, and that the former employees knew it was fraudulent because they helped create it.

The trial is the first stemming from Madoff’s $17 billion Ponzi scheme, which collapsed after his confession and arrest in December 2008. O’Hara, Perez and three other former Madoff employees went on trial in October over accusations they aided the fraud for decades and got rich in the process.

The trial is the first stemming from Madoff’s $17 billion Ponzi scheme, which collapsed after his confession and arrest in December 2008. O’Hara, Perez and three other former Madoff employees went on trial in October over accusations they aided the fraud for decades and got rich in the process.

The programmers used “a variety of techniques” for generating “pseudo-randomized” data for documents, said Dietrich, a 32-year IBM veteran who helped develop the AS400 computer system used at Madoff’s now-defunct company. The programming was used to perform tasks such as assigning random international banks as counterparties to fake trades and making false Depository Trust Co. statements, he said.

Eric Arthur Blair aka George Orwell

"Hope" is not a valid investment strategy

Full Time Jobs Over Last 5 Years

Is Your Gold Missing?

Why Gold?

Gold is the world's oldest currency. You exchange your fiat currency (dollars, euros, yen, yuan) into gold as an insurance policy against catastrophic Central Bank and Government policies which serve to destroy the value of fiat currencies and destroy democracy.

Gold can ONLY be considered an investment to the extent that it remains significantly and historically undervalued in relation to the fiat currencies against which its value is measured. Otherwise it remains the world's oldest currency and is completely free from the counterparty risk associated with currency by Government fiat (i.e. fiat currencies rely on a Government's "full faith and credit.")

Epic Quote - "Jesse" Sent This To Me

"The world will soon wake up to the reality that everyone is broke and can collect nothing from the bankrupt, who are owed unlimited amounts by the insolvent, who are attempting to make late payments on a bank holiday in the wrong country, with an unacceptable currency, against defaulted collateral, of which nobody is sure who holds title." - Anonymous

The Basic Fundamental Problem

What's the solution?

“THERE IS NO MEANS OF AVOIDING THE FINAL COLLAPSE OF A BOOM BROUGHT ABOUT BY CREDIT EXPANSION. THE ALTERNATIVE IS ONLY WHETHER THE CRISIS SHOULD COME SOONER AS THE RESULT OF A VOLUNTARY ABANDONMENT OF FURTHER CREDIT EXPANSION OR LATER AS A FINAL AND TOTAL CATASTROPHE OF THE CURRENCY SYSTEM INVOLVED.”

Ludwig von Mises – Austrian Economist (1881- 1973)

Quote Of The Month Courtesy of "Jesse"

Unfortunately for Larry Summers, Ben Bernanke, and their friends at the BIS, they have not yet figured out how to print physical gold, silver, and other essential commodities, and the world is reaching the point where it might simply start ignoring the New York based markets with respect to essential commodities such as basic materials, oil, foodstuffs, and the like, as they become increasingly irrelevant, fraudulent, and Orwellian. And then where will the financial engineers be, except with no more excuses and no place to hide?

Great Quote From Jim Rogers On Govt CPI Reporting

JR: I mean, we have inflation now. If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything. The government lies about it in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up.

Q: Are you saying that the American Consumer Price Index (CPI) published by the US Bureau of Labor Statistics is a lie? JR: In my opinion, yes, of course it is. Have you looked at it? They’ve changed their accounting several times in the past few decades. When housing was 20% to 25% of the CPI and housing was going up, they didn’t count it, saying rents weren’t going up, and then when home prices started going down, they counted it. It’s the same with many things. It’s staggering some of the tortuous reasoning that the BLS has used over the past 25 or 30 years. When the price of gasoline goes up, they say it’s not really going up because it’s better gasoline, better quality, therefore you’re getting more for your money. I mean, it’s endless, the stuff that they say and for some reason people sit there, although more and more people are catching on, and accept what the government says.

Priceless Quote From Richard Russell

On Larry Summers: This doofus practically ruined Harvard when he headed it. I can't think of a worse choice to be chief economic advisor. I wouldn't trust Summers to manage a Starbucks franchise.

Quote of the Week

"The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress." - Dave in Denver

If you refuse to believe the above, please read "The Creature From Jekyll Island: A Second Look at the Federal Reserve" by G. Edward Griffin and then explain to me why the Senate voted down the Vitter Amendment and Congress refuses to pass a law requiring a full audit of the Fed, even though the Fed is using taxpayer-backed money to bailout Wall Street and Europe.

Quote of the Month

And very relevant in the context of yesterday's post about gold moving higher against all fiat currencies:

Just imagine what would happen if a mere ten percent of the money currently going into bonds were instead to go into gold. As in 1972, the real move has yet to begin.

- Murray Pollit, Pollit & Co.

A Picture Says It All...

www.moneyandmarkets.com

Golden ore samples produced by Eurasian Minerals

Undisclosed exploration site

The Next Reserve Currency?

1 oz. Chinese Panda

Guess who said this?

Rising prices of precious metals and other commodities are an indication of a very early stage of an endeavor to move away from paper currencies...What is fascinating is the extent to which gold still holds reign over the financial system as the ultimate source of payment.

-Alan Greenspan, 9 Sep 2009

THIS is what REAL money looks like

1 oz. Gold Eagles

Alan Greenspan said what?

“Deficit spending is simply a scheme for the ‘hidden’ confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights.”

From "Gold and Economic Freedom" a 1966 Essay by Alan Greenspan

About Me

I spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, I traded junk bonds for a large bank. I have an MBA from the University of Chicago, with a concentration in accounting and finance.
Currently I co-manage a precious metals and mining stock investment fund in Denver.
My goal is to help people understand and analyze what is really going on in our financial system and economy.